UK currency weakness affecting Indian exports

Uncertainty over the conditions of the Brexit and the steep fall of the pound over the past week are affecting India’s exports to the UK and Europe, its most important markets.

India’s leather exports have declined 8% to US$451 million in August 2016 due to lower demand from European Union. In 2015-16, export of leather and leather products stood at US$5.85 billion against US$6.49 billion the previous fiscal, a 9.86% drop.

The UK and the EU accounted for 14% and 65% of total leather exports, respectively. According to Rafeeque Ahmed, Chairman, Council for Leather Exports (CLE), textile exporters and other sectors face tough times because of the uncertainty over the process of Britain’s exit from the EU, and he stresses the difficulty in diversifying into other markets in a short period of time.

India is also said to face increasing competition from countries such as Bangladesh, Vietnam, which benefit from free trade agreements.